Monthly Construction Industry Index up on More Commercial Construction

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Source: MetalMiner IndX(SM)

The monthly construction index registered a value of 91 in December, an increase of 1.1 percent from 90 in November. This month, the construction industry witnessed a mild boom as residential construction along with commercial construction posted some optimistic numbers.

Construction spending

Construction spending increased 1.4% according to the Wall Street Journal “to a seasonally adjusted annual rate of $872.14 billion,” the Commerce Department said Monday. That exceeded economists’ expectations of a 0.5% increase according to those surveyed by Dow Jones Newswires.

More good news – the Census Bureau also “revised construction spending numbers for August up by $9.1 billion (1.1% higher than reported last month) and for July by $4.6 billion (0.5% higher than reported last month),” according to Reed Construction Data.

MetalMiner previously published an upbeat piece on residential construction as well as commercial and institutional construction.

“Steel industry followers have long watched construction industry activity flounder typically with residential construction down in comparison to commercial construction,” said Lisa Reisman managing editor of MetalMiner, “we now finally see the first seeds of growth for housing starts as well as respectable commercial construction activity.”

“A growing US construction market combined with a recovering Chinese construction market and we could see a small lift in prices for the metals used by these industries,” continued Reisman.

The Forecast
Reed Construction Data forecast total construction spending to increase “8.3% in 2012, 7.7% in 2013, and 9.2% in 2014.” This forecast dovetails with a recent forecast presented by ITR Economics stating “construction is improving and makes up 9% of GDP..over the last 2 months the third quarter 2012 rate of change has moved up even higher.”

US shredded scrap finished the month gaining 13 percent. The price of European 1050 aluminum climbed 3.5 percent, also lending support to prices.

Following a 11.1 percent decline in price, Chinese rebar came in as the worst performer of the index. However,  Chinese H-beam products held steady indicating the Chinese market may have begun to stabilize (prices had fallen). Economists from ITR Economics suggest Chinese construction activity will pick up again in 2013, lending support to rebar and H-beam prices.

The price of Chinese aluminum bar held flat over the past month.

The Construction MMI® collects and weights 9 metal price points used within the construction industry to provide a unique view into construction industry price trends over a 30-day period. For more information on the Construction MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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